Self-Help Groups and the Livelihoods Mission

How small groups of rural women save together, borrow and start enterprises, and how India's National Rural Livelihoods Mission scaled the model to tens of millions.

A self-help group, or SHG, is a small group of around 10 to 20 people, usually women from similar backgrounds, who save money regularly, lend to each other and access bank loans together.

How SHGs work

Members meet regularly, often weekly, and each contributes a small amount of savings.
The group lends pooled savings to members for needs like emergencies, education or small businesses.
After building a track record, the group can borrow from banks through the SHG-Bank Linkage Programme, pioneered by NABARD, India’s national bank for agriculture and rural development, from 1992.
Group members guarantee each other’s loans, using social ties instead of collateral.

Scaling up

The Deendayal Antyodaya Yojana - National Rural Livelihoods Mission, launched in 2011, mobilised rural women into SHGs across India. It supports groups with training, revolving funds, interest subsidies and links to markets. By the 2020s, the mission reported over 90 million women organised in around 9 million SHGs, making it one of the largest women’s organisations in the world.

Kerala’s Kudumbashree programme, launched in 1998, is a well-known state-level model.

Benefits

Access to credit for women without collateral or credit histories.
Savings habits.
Livelihoods: SHGs support enterprises like tailoring, food processing, dairy and handicrafts.
Empowerment: studies have found SHG membership can increase women’s confidence, decision-making power and participation in village affairs.

Challenges

Many SHG enterprises remain very small.
Loan repayment and group quality vary.
Market access for SHG products can be limited.

A group of ten women

Ten women in a village each save 100 rupees a month. After six months, they have a fund of 6,000 rupees and lend it to members for school fees and a sewing machine. After a year of regular savings and repayments, the bank lends the group 1 lakh rupees, which members use to start a small pickle-making business, selling in nearby markets.

Thinking SHGs are only about loans

SHGs also build savings, social networks, confidence and collective voice. Their value goes beyond access to credit.

Key takeaways

SHGs are small groups that save together, lend to members and borrow from banks.
NABARD pioneered SHG-bank linkage from 1992.
The National Rural Livelihoods Mission, launched in 2011, organised over 90 million women.
SHGs improve access to credit, savings, livelihoods and women's empowerment.